Name: ______________________________________ Date: __________________

45 Points Submit in Canvas

Budget Assignment
This assignment supports the following course objectives
• Plan and prepare budgets
• Appraise and perform management functions including planning and controlling
Instructions:
Please download or save this assignment to your computer. Complete the assignment (this must be typed). When you are finished, submit in Canvas.
Please answer all the essay question thoroughly, a paragraph at a minimum.
Throughout the assignment please show all your math and calculations.
All work must be your own; no two student’s budgets should be the same.
Budget Assignment

You have just been promoted to manager and your boss wants you to be responsible for the preparation of next year’s fiscal budget. What is the primary purpose of having mangers participate in building their own budget? (2 points)

As the manager you are thinking about altering your department budget in the middle of the year. Describe a set of circumstances that may result in a mid-year change. (2 points)

In your role as the departmental manager, what parts of the total budget will you have no role in preparing? Why (2 points)

Explain why coming under budget is not always a good sign for some budget expenses. (2 points)

Grant and Lee Medical Office Budget

You are the Office Manager of Grant and Lee’s Medical Office, a large dermatology practice office serving Philadelphia, Montgomery and Bucks counties. It is budget preparation time. You have been provided with the following expectations by the financial manager that you need to include.

Step One: The following expectations for next year’s budget have been provided by the Financial Manager.

Show all your work–calculationsof each item[10 points] Please use as much space as needed. The cell will expand as you type. Please round up or down as appropriate.
Expectation Work area—Show Calculations

Medicare income of $426,000 will increase by 4.25%

Clients paying cash of $150,000 will increase by 1.25%

Private insurance of $284,000 will decrease by 1.50%

HMO income of $340,000 will decrease by 3.75%

The physicians would like to give all the employees a 1.15% salary increase to the current $720,000 salary cost.

Current benefits cost of $214,880 will increase by 1.4%.

A new contract was signed with a new linen company decreasing the current Linen/Laundry costs of $18,400.00 by 1.3%

Some equipment is reaching the end of depreciation and the current equipment deprecation of $24,500.00 will be decreasing by 2.4%

Other equipment is getting old and repairs are becoming more frequent, plan on a 3% increase the current cost of $16,400.00 for equipment repairs.

The current Plant operations of $47,500.00 will be decreasing by 1.2%

Step 2: Your goal now is to complete all of the attached budget worksheets. Your task is to plug in all of the expectations. Then determine if you need to make budget cuts or if you will break even. Please make sure you complete and submit each worksheet.
Grant and Lee Medical Office
Revenue and Income Current Budget
2015 Budgetwith expectations 2016
Medicare $426,000.00
Private Insurance $284,000.00
HMO $340,000.00
Cash Received $150,000.00
Total Revenue $1,200,000.00
Expenses
Minor Equipment $18,600.00 $18,600.00
Medical Equipment Rental $14,000.00 $14,000.00
Travel $12,500.00 $12,500.00
Telephone $12,000.00 $12,000.00
Office Supplies $11,500.00 $11,500.00
Postage $11,350.00 $11,350.00
Copy Machine Rental $12,000.00 $12,000.00
Advertisement $27,500.00 $27,500.00
Professional Dues $5,500.00 $5,500.00
Books /Magazines $4,300.00 $4,300.00
Employee Parking $8,400.00 $8,400.00
Housekeeping $19,975.00 $19,975.00
Salaries $720,000.00
Employee Benefits $214,880.00
Equipment Depreciation $24,500.00
Physical Plant Operation $47,500.00
Equipment Repairs $16,400.00
Laundry/Linen $18,400.00
Total Expenses $1,199,305.00
Difference ($695)
All lines on this form need to be filled in. Please calculate the total expenses and the difference. The chart above is 5 points. Please do not make any changes to the shaded area on this worksheet.
Step 3: Your goal now is to make changes to the budget to break even or generate a profit. Knowing what you need to run a medical office effectively and efficient carefully consider the need for each line item. You will need to make adjustments (decreases) in at least 5 line items, more than 5 is also OK, so that this budget breaks even or generates a profit. Please no additional changes can be made to the line items you adjusted for expectations. Focus on the line items in the shaded area in the step 2 budget. You need to justify each of your actions. Since Professional Dues is used as an example you cannot use this line item for one of your adjustments.

Here is an example
Line Item Current Dollar Amount Proposed Dollar Amount Change Justification
Professional Dues
$3,500.00

$2,100.00

-$1,400.00 The Medical Office will now only pay 40% of the employee dues to their professional organization.
(5 points)
Line Item Current Dollar Amount Proposed Dollar Amount Change Justification

Total
Now that you have worked out all of your adjustments to break even or make a profit, submit your final budget. Use the form on the next page.

Grant and Lee Medical Office

Revenue and Income Budget with expectations 2016 Budget with Proposed Adjustments
2016
Medicare
Private Insurance
HMO
Cash Received
Total Revenue
Expenses
Minor Equipment
Medical Equipment Rental
Travel
Telephone
Office Supplies
Postage
Copy Machine Rental
Advertisement
Professional Dues
Books /Magazines
Employee Parking
Housekeeping
Salaries
Employee Benefits
Equipment Depreciation
Physical Plant Operation
Equipment Repairs
Laundry/Linen
Total Expenses
Difference
All blocks must have a value.5 points

FTE Problems (12 points)

Also complete the following problems. Please show all work to earn full credit.
You are the Department Manager of the Clinical Lab that has 22 employees. You have 4 employees who work full time, plus 8 employees who work 24each week, 6 employees that work 12 hours a week and 4 employees that work 8 hours. How many total hours are scheduled weekly? How many FTE’s do you have in your department?

As the office manager of the Helen Taft Surgical Center you need to cover a 6 day schedule with all part time help. 16 employees work 24 hours a week, 12 employees work 18 hours a week and 8 employees work 16 hours per week. How many annual hours do the part time employees work? How many FTE’s work at the Helen Taft Surgical Center?

You desire to add a new position to your medical office. The practice is opened six days a week.This new employee will be responsible for advertising methods to increase clients. On average you want this person to send out 125 letters weekly to potential new clients. You estimate that it will take 12 minutes to merge the data bases and prepare a letter to be mailed. You are planning that this new employee works 4 days a week. On the days this employee is scheduled they will need to cover for some employee breaks and lunches. You are planning 1 and ¾ hours of daily lunch and break coverage. You are not sure if you will need 1 or 2 employees, calculate the FTE’s of this position so that you can determine how many individuals you will need to hire.

You are the office manager of a small office practice that is opened 6 days a week. You have a staff of 5 full time employees that work 40 hours a week, 6 employees who work 18 hours weekly and 2 employees that work 12 hours weekly, how many daily FTE’s are there?

*Assignments are expected to be submitted on time. Assignments received after the deadline have a 10% reduction for the first 24 hours and then one point daily until no points remain or until the last day designated on the syllabus.

 
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